As many of you know, the Utah Legislature highlighted sales tax reform as an agenda priority in the 2019 session. The proposed verbiage was publicly shared two weeks prior to the end of the session and many citizens and private interest groups overflowed the Legislature with opinions for and against the changes. One of the largest concerns was taxing service providers such as plumbers, electricians, realtors, accountants, and yes, lawyers.
I am one of many people with strong opinions about many things, but it’s important for all of us, regardless of our opinions, to understand facts to base our opinions upon so we can create resolutions to meet the concerns of others, both actual and perceived. So, let’s learn about sales tax so we can be informed when we express our opinions.
What is sales tax? Currently, sales tax is a compounded (added-on) tax where the state has a base rate which the county and city can add additional rates. For instance, to sell a cup of coffee in Torrey requires a 7.01% sales tax cost but to sell a cup in Joseph is around 6.65%. However, selling grocery items is a state-wide 3% sales tax.
Sales taxes fund the State of Utah’s general fund which pays for state government services such as public safety, courts, social services, elections, air quality, and transportation. Sales tax does not fund education. Sales taxes also fund municipalities and with the transient room tax, provide budgets to county tourism offices.
Why does the state want to change sales tax? There are many reasons. Some include businesses who want “fair” taxing for services and products. Others have valid economic reasons such as the sales tax base has decreased nearly 57% since the 1980s while income and property tax grows. Many theories persist about the decreased sales tax revenue: online sales where tax is not collected, buying more services than goods, and increased exemptions. The other issue is how higher education is funded. The Governor’s Office of Management and Budget published an informative position statement about why sales tax should be reformed, check it out.
Should legal services be taxed? You can probably guess my opinion is “no” for many personal and professional reasons. But regardless of my opinion, I hope you now understand some of the issues faced by the state regarding its tax structure. I also hope you use this information to create your own informed opinion.
What’s your opinion? If you have opinions about changing the tax structure in Utah, the closest townhall to Garfield, Wayne, Piute and Sevier, County will be in Richfield on June 28th with a tentative start time of 6 pm. The location has not yet been published. Participate in your government. If you are unable to attend the townhall, contact your elected officials to express your opinions and how changes to the tax structure would affect your communities and businesses.
Disclaimer. As always, my column is not legal advice, instead merely insight into the law and legal profession. If you have a general question about the law or legal profession, please email me at firstname.lastname@example.org or call 435.610.1431.